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Richard Russell, the famous writer of the Dow Theory Letters, has a chilling line in today's note:

Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him.

That's pretty intense!

Update: By popular demand, here's more on what he sees in the market. The gist is that the markets recent gyrations are telling him that the economy is in trouble:

And I ask myself, "Am I seeing things? The April 26 high for the Dowwas 11205.03. The Dow is selling as write at 10557 down 648 pointsfrom its April high. If business is even better than expected, thenwhy is the Dow down over 600 points? And why, if there were 674 newhighs on the NYSE on April 26, were there only 20 new highs on Friday,May 14? And if my PTI was 6133 on April 26, why is it down 17 pointssince its April high?

The fact is that I've been seeing deterioration in the stock marketever since early-April, and this in the face of improving businessnews. The D-J Industrial Average is composed of 30 internationallyknown top-quality blue-chip stocks. These are 30 of "America's biggestcompanies." If Barron's is so bullish on the future of America'sbiggest companies, then why isn't the Dow advancing to new highs?

Clearly something is wrong. But what could it be? Much as I loveBarron's, I trust the stock market more. If I read the stock marketcorrectly, it's telling me that there is a surprise ahead. And thatsurprise will be a reversal to the downside for the economy, plus acollection of other troubles ahead.

About Dow Theory -- First, we saw the recent April highs in theAverages. Then we saw a plunge in both Averages to their May 7 lows --Industrials to 10380.43, Transports to 4298.12, next a short rally. Ifahead, the two Averages turn down and violate their May 7 lows, thatwould be the clincher. Such action would signal the certain resumptionof the primary bear market.

Just as for years I asked, cajoled, insisted, threatened, demanded,that my subscribers buy gold, I am now insisting, demanding, beggingmy subscribers to get OUT of stocks (including C and BYD, but notincluding golds) and get into cash or gold (bullion if possible). Ifthe two Averages violate their May 7 lows, I see a major crash as theoutcome. Pul - leeze, get out of stocks now, and I don't give a damnwhether you have paper losses or paper profits!